Moving on from Vanguard Personal Advisor Services

[TripleLindy]

I’ve been with Vanguard PAS for 6 years and felt that the .3% fee was at least competitive. Portfolio performance has been sub-par, though. Super simple “auto pilot” portfolios like Couch Potato have outperformed PAS since I’ve had the service. Fortunately, even after retiring at 55 five years ago, I’ve yet to withdraw from my portfolio, but I’ll need to start doing so within the next 12 months. So, assuming I move on from PAS and assume responsibility for portfolio management, my 2 primary questions are:

1. What are my primary concerns when it comes to withdrawals (taxes, annual lump withdrawal vs monthly, other)?

2. I’ll keep my money in a Vanguard account, but just terminate PAS. Does anyone what that process is like? Will I be able to keep the same funds? Since performance hasn’t been good, this isn’t a driving factor, but I want to avoid a tax situations with conversion.

Thanks for any advice!

 

[Jerry1]

1. What are my primary concerns when it comes to withdrawals (taxes, annual lump withdrawal vs monthly, other)?

My primary concern when I withdrawal from my tax deferred accounts is my tax bracket. I work toward maximizing the 12% bracket. If I go over that, everything additional gets taxed at 22% (ten points higher). So, I pay attention to that.

I don’t worry about how to take it out (monthly, annually), but I do take advantage of the withholding to pay my taxes at year end. If you withhold taxes from your withdrawal, it’s assumed to be spread throughout the year. So, no need to make estimated quarterly payments.

 

[Ger0n1mo]

I managed my Vanguard accounts while I was in the accumulation phase. About two years before I retired I signed up with PAS and it has been beneficial for their advice.Vanguard told me that I did a very good job managing my accounts on my own. Preparing for retirement created new questions and issues for me such as moving my 401K from Merrill Lynch to my Vanguard IRA. The advisor at ML kept giving me the run-around and was being difficult until I pulled my Vanguard advisor in and the ML guy just did what he was instructed. They have been good with advice and managing my account. I will likely drop them in a couple of years once my retirement is firmly in place and I need minimal management. But, one thought to keep in mind is that for the .3% fee it is good insurance if I die and they will help my spouse tremendously to navigate all of the issues.

 

[mrfeh]

I’ve been with Vanguard PAS for 6 years and felt that the .3% fee was at least competitive. Portfolio performance has been sub-par, though. Super simple “auto pilot” portfolios like Couch Potato have outperformed PAS since I’ve had the service. Fortunately, even after retiring at 55 five years ago, I’ve yet to withdraw from my portfolio, but I’ll need to start doing so within the next 12 months. So, assuming I move on from PAS and assume responsibility for portfolio management, my 2 primary questions are:

1. What are my primary concerns when it comes to withdrawals (taxes, annual lump withdrawal vs monthly, other)?

Go over to bogleheads.org and search for "decumulation".

Lots of advice, plus some spreadsheets/tools.

 

[DrRoy]

You should be able to keep the same investments.

 

[Time2]

After I retired I found it very helpful to fill up my needed income for the next year in December. I use the Dinkytown 1040 tax calculator, I enter what I expect in dividends and interest*, HSA deduction, all the usual, then start playing with our tax deferred account withdrawal amount until I just break the 22% bracket, then back down to the 12% bracket. I'm maxing my Roth Conversions, so want to keep ourselves in the 12% bracket. This has worked out great now for 3 years. Be sure to make sure you use the correct 1040 in Dinkytown, you want next years increased standard deduction. I missed that one year, so missed an additional $500 in Roth Conversion.
So, far I have had a few thousand dollars left over at the end of the year, meaning, I have split the December accumulation about right between Roth Conversions and spendable money.





* By December I have the first 3 quarters on record and can usually get the 4th estimated pretty well.

 

[2017ish]

We've been living solely on TIRAs for roughly 3 years, after exhausting all of our taxable accounts. We figure our allowable withdrawal near the beginning of the year, then liquidate within a TIRA early on, so as to have liquidity for automatic monthly withdrawals with withholding. That monthly amount is what we expect to spend--and has been less than 1/12 of what we "can" spend. (Well, maybe not next year!)

Nearing the end of the year, I look at how much headroom we have left within the targeted tax bracket and do Roth conversions (and associated tax payments) to fill the brackets.

Lots of ways to skin this cat....

 

[Rianne]

We considered VG PAS. We withdrew from bond funds (on our own) and laddered treasuries. I don't think a PAS would encourage that move. We remain in index funds at 60% of our portfolio. The index funds are down, but we won't sell for a few more years and hope they come back. What else can one do? We don't actively trade other than the bond switch.

I guess I don't see the value in PAS. Could be wrong.

 

[TripleLindy]

We considered VG PAS. We withdrew from bond funds (on our own) and laddered treasuries. I don't think a PAS would encourage that move. We remain in index funds at 60% of our portfolio. The index funds are down, but we won't sell for a few more years and hope they come back. What else can one do? We don't actively trade other than the bond switch.

I guess I don't see the value in PAS. Could be wrong.

I still haven’t decided what to do. As others mentioned, I’d be concerned about my wife managing any type of investment if I pass first, as she just has no interest in the topic. Had a long conversation with my advisor this morning. The poor performance relative to the funds I manage on my own is due to Vanguard’s requirement of a minimum of 20% of equities in the international market. I asked what is meant by “requirement”, given that it’s my money, and was advised that in order to provide broad diversification, there’s a minimum international investment requirement per the PAS agreement. While international has severely lagged domestic performance over the past 5 years, Vanguard believes that ignoring 50% of the global market is a mistake. We’re moving my distribution down to the minimum international exposure, once we determine what the tax exposure of making the change would be.

Needless to say, I’m not thrilled that I’m paying Vanguard more than $10k annually to underperform what I’ve been doing on my own. Net left on the table when including underperformance is roughly $100k annually. Makes me nauseous.

 

[RetMD21]

Needless to say, I’m not thrilled that I’m paying Vanguard more than $10k annually to underperform what I’ve been doing on my own. Net left on the table when including underperformance is roughly $100k annually. Makes me nauseous.

Hey, you can underperform on your own. I have opinions about international too but time will tell who is right. Could you just have your wife switch to the advisory service when the time comes?